INE/GSEE presents economic and employment outlook for 2009

In September 2009, the Institute of Labour of the Greek General Confederation of Labour published its annual report on the Greek economy and employment. The report examines key developments in the economy, including industrial relations, social policy and employment. The 2009 report reveals increases in indirect taxes, average real wages, working hours and unemployment. Moreover, more women than men are unemployed or work part time.

The Institute of Labour (Ινστιτούτο Εργασίας, INE) of the Greek General Confederation of Labour (GSEE) published its 2009 Economic and Employment Outlook report (in Greek) in September 2009. Like the institute’s 11 previous annual economic and employment outlooks, the 2009 report makes an important contribution to the public debate on labour market developments and industrial relations in Greece, as well as on the evolution of basic macroeconomic indicators such as labour productivity, wages, labour costs and investment.

Researched over the course of the entire year, the report has been compiled within the framework of INE/GSEE’s overall research and study activities. The findings provide advance notice of the general direction of government policy in relation to the economy and employment for the coming period; they also provide a frame of reference for the new national budget.

Report findings

Tax system

The real tax burden on workers in Greece (35.1% in 2006) is close to the EU25 average (36.4% in 2006), but real taxation on company profits (15.9% in Greece) is less than half the average in the EU25 (33%). In parallel, an analysis and processing of data on direct and indirect taxes in the former EU15 (Eurostat, May 2009) show that direct taxes in Greece stood at 8% of gross domestic product (GDP) in 2004 and 7.7% of GDP in 2008, whereas in the EU15 the respective figures were 11.3% and 12.2%. Indirect taxes in Greece represented 11.6% of GDP in 2004 and 12.3% of GDP in 2008, compared with 13.2% and 13%, respectively, in the EU15. Thus, indirect taxes in Greece as a percentage of the total of both direct and indirect taxes increased to 61.5% in 2008, whereas in the EU15 they decreased from 53.9% in 2004 to 51.6% in 2008.

Pay

Labour Force Survey (LFS) data for the second quarter of 2008 show the following distribution of workers’ pay.

Source: National Statistical Service of Greece (Εθνική Στατιστική Υπηρεσίατης Ελλάδος, ESYE), LFS, 2nd quarter 2008

The average net monthly wage was €1,010, and the mean monthly wage stood at about €980. Thus, the upper pay limit for low-paid workers was around €650; this group represented 18% of all workers.

Cumulatively for the four-year period 2005–2008, the increase in average real wages per employee amounted to 8% or 2% a year, whereas the respective changes in hourly wages were 3.3% or 0.8% a year. Since 1985, annual working hours have fluctuated around an average of 2,120 hours. During 2007 and 2008, working hours increased to 2,150 and 2,175 hours a year respectively. Therefore, of the increase in average real pay, 1.2% is due to the fact that workers worked longer hours and only 0.8% can be attributed to other factors.

Minimum gross monthly pay for 2008 was €802.50, calculated on the basis of 14 monthly salaries a year. It is estimated that 18%–25% of employed people receive the minimum wage.

The average net pay increased more rapidly than the minimum net wage. However, the ratio between the two rates declined from 55% in 1994 to 45% in the six years between 2002 and 2007; in other words, in 1994 the minimum wage represented 55% of the average net wage, while in 2002 the minimum wage was only 45% of the amount of the average net wage (see also the 2007 EWCO report on Minimum wages not keeping pace with earnings).

Unemployment

In 2008, according to LFS data for the second quarter of the year, the unemployment rate was 7.2% of the country’s labour force, corresponding to an absolute number of 357,000 unemployed people. In April 2009, the unemployment rate had reached 9.4% of the labour force (466,878 people), from 7.7% (380,775 people) in 2008, representing a 22.6% increase. Compared with April 2008, some 90,576 fewer people were employed and 86,100 more people were unemployed, resulting from the downturn in economic activity and the subsequent increase in dismissals in manufacturing, construction, trade and tourism.

Women constitute half of the country’s productive population. Their unemployment rate (10.9%) is 1.5 times higher than the average unemployment rate (7.2%), and more than twice the unemployment rate of men (4.7%). Women constitute 62% of unemployed people, which means that six out of every 10 unemployed people are women. Currently, a total of 1,793,524 women are in employment, a ratio of around four women out of every 10 working people (39.1%). Women work mainly as employees (seven out of 10 women). A higher proportion of women than men work part time (9.7%); out of every 10 part-time employees, seven are women.

Commentary

The most important finding of the report on the economy and employment outlook is that unemployment will remain the most prominent problem, not only in the short term but also in the medium term. The report also highlighted that the rapid growth experienced by the country over the past 15 years was based on lower labour costs, lower incomes for wage earners and the redistribution of income to the benefit of the wealthier classes in society.

INE/GSEE believes that a policy to support the economy by increasing public funds through a redistribution of income will allow for a more rapid increase in employment, through the immediate creation of jobs in services, healthcare, education, public services and the green economy. The confederation also considers it necessary to drastically redistribute income from higher to lower incomes, as well as to raise public funds substantially (by combating tax evasion and tax avoidance) in order to reinforce social policies and policies providing for financial support for an integrated scheme of restructuring production and services.

Sofia Lampousaki, Labour Institute of Greek General Confederation of Labour (INE/GSEE)